Chart Signals: USD still climbing but looks vulnerable

09:45, 18 November 2016
· By Colin Cieszynski

Share

The relentless US Dollar rally continues putting a number of other currencies under pressure like NZD, AUD, CAD, JPY, EUR and gold. The greenback is getting dangerously overbought, however, and it wouldn’t take much to send it tumbling backwards as we saw with copper last week. Meanwhile, indices are trying to shrug off recent weakness, particularly the Australia 200, Japan 225 and US NDAQ 100.

Asia Pacific Indices

Australia 200 held support near its 200-day average around 5,275 and has bounced back up toward the 5,340 to 5,360 range just below its 50-day average. RSI testing 50 where a breakout would signal an upturn but a failure would confirm the current downtrend. A move above 5,400 still needed to signal an upturn with next resistance near 5,500 and 5,600.

Japan 225 has resumed its uptrend, rallying up from near 17,860 through the 18,000 round number and on toward 18,075 a Fibonacci test. Rising RSI confirms upward momentum increasing. Next potential resistance near 18,445.

Hong Kong 50 is on the rebound, driving up off 22,180 support through 22,260 and on toward 22,320 having previously tested 22,000 support. Initial resistance possible in the 22,480 to 22,500 area. RSI suggests downward pressure levelling off at least.

North American and European Indices

US 30 is still struggling with the 19,000 round number, slicing back into the 18,860 to 18,890 area. RSI still overbought suggests potential for a deeper correction with next support possible near 18,800 then 18,660 a recent breakout point.

US NDAQ 100 is trying to rebound clearing the 50-day average near 4,810 so far but meeting some resistance near 4,825 with more possible near 4,890. RSI retaking 50 confirms momentum turning upward again.

US SPX 500 remains stuck below 2,190 channel resistance recently trading between 2,178 and 2,188. RSI topping near 60 suggests recent upswing within a sideways trend appears to be ending and a downswing possible with initial support near 2,148 and the 50-day average.

UK 100 has found some support in the 6,740 to 6,810 area above 6,700 but below 6,850 and 6,925 resistance. RSI stuck below 50 indicates index remains in a downswing for now with next potential support near 6,650.

Germany 30 has successfully tested 10,600 for now with more support possible at the 50-day average near 10,540. The index has bounced up through 10,680 toward 10,.710 with resistance in place near 10,800. RSI holding 50 indicates sideways trend intact.

Commodities

Gold continues to base build successfully retesting $1,210 to complete a double bottom test of Fibonacci support with more possible near the $1,200 round number. A positive RSI divergence indicates downward momentum slowing and a rebound possible. Upside resistance appears near $1,217 then $1,225 and $1,229.

Crude Oil WTI’s latest upswing faltered near $46.50 short of its 50-day average near $47.00 while the RSI faltered short of 50 confirming its sideways to downward trend isn’t over yet. The price has dropped back to retest $45.00 with next support after that near $43.65 and the 200-day average.

FX

US Dollar Index is breaking out again, clearing 100.55 its late 2015 high and advancing on 101.00 measured resistance. Next potential upside tests on a breakout near the 102.50 round number then a double measured 103.00. Overbought RSI suggests potential for a correction but also indicates upward momentum still intact for now.

EURUSD is breaking down again, taking out $1.0700 which may become resistance and falling toward $1.0625. Oversold RSI suggests potential for a trading bounce but for now the overall downtrend remains intact with next potential support near $1.0550 then $1.0500.

GBPUSD continues to trade between $1.2325 and $1.2525 but may be coming under renewed distribution, recently sliding from near $1.2500 toward $1.2410. RSI slipping back under 50 signals momentum turning downward.

NZDUSD has a big support test underway at $0.7000 where a round number, Fibonacci level, 200-day average and the neckline of a head and shoulders top all converge. This key level has passed its first support test with initial resistance near $0.7040 then $0.7090 but on a breakdown, next support doesn't appear until $0.6940 then $0.6840.

AUDUSD is breaking down today, confirming its break of $0.7500 by diving from near $0.7480 toward the $0.7390 to $0.7420 area with next potential support near $0.7300. Falling RSI confirms downward pressure increasing.

USDSGD is breaking out again, climbing up from near $1.4160 through $1.4200 with next potential resistance near $1.4260 then $1.4330. RSI getting really overbought indicates it wouldn’t take much to spark a correction.

USDJPY has cleared 109.00 a 38% retracement of its previous downtrend and is bumping up against the 110.00 big round number with next resistance near 111.50 then 112.20. Overbought RSI suggests potential for a downturn with next support possible near 107.85.

GBPJPY has paused near 136.50 within the 135.00 to 137.00 zone to digest recent gains and work off an overbought RSI, Next upside resistance possible near 138.10 a 38% retracement of its previous downtrend.

EURJPY has settled back toward 116.75 above its 116.15 breakout point but below 117.540 recent resistance. RSI suggests upward momentum may be pausing for a rest.

USDCAD appears to be resuming its uptrend with RSI confirming underlying accumulation remains intact. The pair has bounced up from near $1.3420 toward $1.3500 with next potential resistance near $1.3570 a 50% Fibonacci retracement of its previous downtrend.

Investing in CMC Markets derivative products carries significant risks and is not suitable for all investors. You could lose more than your deposits. You do not own, or have any interest in, the underlying assets. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. Spreads may widen dependent on liquidity and market volatility.

The information on this website is prepared without considering your objectives, financial situation or needs. Consequently, you should consider the information in light of your objectives, financial situation and needs.

CMC Markets NZ Limited Company Registration Number 1705324 (the product issuer) provides the financial products and/or services. It's important for you to consider the relevant Product Disclosure Statement ('PDS') and any other relevant CMC Markets Documents before you decide whether or not to acquire any of the financial products. Our Financial Services Guide contains details of our fees and charges. All of these documents are available at cmcmarkets.co.nz or you can call us on 0800 26 26 27.

Apple, iPad, and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.